Earnings Preview: Goldman Sachs (GS) NYSE; Wells Fargo (WFC); BBBY

  • Q1 2021 earnings season kicks off on Wednesday.
  • Goldman Sachs, Wells Fargo and Bed Bath & Beyond are the highlights.
  • Analysts are bullish, predicting a 25% earnings gain for Q1 2021.

Earnings season kicks off again on Wednesday with financial stocks taking centre stage this week. Goldman Sachs stock will garner the most attention on Wednesday as GS reports Q1 2021 earnings. Goldman Sachs reports before the market opens on Wednesday at 0730 EST / 1230 UK time. Goldman traditionally leads the other investment banks, so it will be closely watched. Commentary around the recent Archegos developments and trading volumes going forward after the retail frenzy will also be key. It is importnant to focus on how each measures up, what is expected, and what the shares have done in the past.

While Goldman is the big headline-grabber on Wednesday, there is a return to the retail memes when Bed Bath & Beyond (Nasdaq: BBBY) reports. Bed Bath & Beyond captured the zeitgeist in January as a member of the meme stock brigade and saw sharp volatility. Results could provide some swings. BBBY stock earnings are released before the open with no time confirmed. The post-release earnings conference call is scheduled for 0800 EST / 1300 UK time.

Wells Fargo (NYSE: WFC) completes Wednesday's lineup. WFC reports before the market opens.

Analysts have penciled in some pretty tough acts to follow for the upcoming quarter. Refinitiv data shows Q1 earnings are expected to rise 25% from a year earlier. This is a like-for-like comparison as the pandemic effects had not fed through. Refinitiv also shows that so far 21 of S&P 500 companies have already reported Q1 2021 earnings, and 81% have beaten analyst forecasts.

The chart from Refinitiv below shows the tech sector having the largest number of upward revisions to estimates, while the financial sector is close behind.

Goldman Sachs stock

Goldman (NYSE: GS) is to report before the market opens on Wednesday. Analyst consensus for earnings per share (EPS) is $10.22 with revenue of $12.61 billion. Goldman Sachs has strongly surprised to the upside over the last three quarterly earnings releases. EPS outperformance was 61% for Q4 2020, 74% for Q3 2020, and 65% for Q2 2020. It is not since this quarter last year that Goldman Sachs missed estimates, and even then only marginally. 

Goldman shares actually dropped on the last earnings date, January 19. Despite EPS beating by 61%, GS shares fell by over 2%. GS shares rallied on the earnings release from $300 to $310 but fell for the remainder of the pre-market and regular session. It was a similar situation for Q3 2020. EPS beat estimates by a huge margin, 74%, but Goldman shares fell after the announcement.

GS said in the aftermath of the last results that capital market activity would likely slow down and that Goldman's consumer business subsidiary Marcus was taking longer to turn a profit. Commentary again around Marcus consumer lending will be watched, despite that currently it accounts for less than 3% of Goldman's revenue. 

Goldman Sachs is scheduled to report earnings at 0730 EST / 1230 UK / 1330 CET


Wells Fargo stock

Wells Fargo (NYSE: WFC) will also report on Wednesday before the market opens. WFC is expected to announce EPS of $0.70 and revenue of $17.5 billion. Wells Fargo stock has not had the same stellar track record of outperformance that Goldman Sachs has shown. In fact, WFC has missed all expectations for 2020, barring the final quarter when it marginally beat estimates. Wells Fargo released Q4 2020 results on January 15 when it beat EPS by 7% and revenue missed expectations by just 1%. However, the Wells Fargo stock price took the news badly and closed down nearly 8% post-release. 

In mid-October 2020 Wells Fargo released its previous numbers. On this occasion EPS missed by 6.6%, while revenue beat by 5%. The stock again reacted negatively and closed 6% lower.

Wells Fargo Bank is due to report earnings before the market opens on Wednesday, but no exact time has been released. 


Bed Bath & Beyond stock

Bed Bath & Beyond (Nasdaq: BBBY) is expected to also release earnings before the market opens on Wednesday. It would seem nobody fancies working late on Wednesday.

BBBY earnings are expected to show EPS of $0.31 and revenue of $2.6 billion. The last number of earnings releases from Bed Bath & Beyond have all been volatile with wide beats and misses versus consensus expectations. BBBY has been one of the meme retail favourites for 20201, and the shares have also been highly volatile. The last set of results for Bed Bath & Beyond were released on January 7. The results were disappointing as both EPS and revenue missed Wall Street analyst expectations. BBBY shares dropped 10% after the earnings release. This was just before retail interest in the shares really took off, so expect more volatility this time if earnings miss or beat by a large margin. 

BBBY shares appreciated from around the $20 level to a high of $53.90 during peak R/WallStreetBets fervour. BBBY shares have since retreated to just under $30 as the retail traders found other stocks to trade and the overall volume of retail flow has decreased as the economy reopens.


First Republic Bank 

Finally on Wednesday First Republic Bank (FRC) reports earnings for Q1 2021 before the market opens. First Republic will not grab as many headlines as the more high-profile names above but will still give clues for the retail banking sector. First Republic Bank is expected to report EPS of $1.54 and revenue of $1.09 billion.


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